States' own revenue plummets 4,7% after changes to the ICMS tax made by the Bolsonaro government.
The Tax on the Circulation of Goods and Services (ICMS) accounts for 76,4% of the tax revenue of the 26 states and the Federal District.
247 - The changes made by the Jair Bolsonaro (PL) government last year to the Tax on the Circulation of Goods and Services (ICMS) in the fuel, energy, and telecommunications sectors resulted in a reduction in the states' own revenue and an increase in spending on public employees. According to the newspaper Valor EconômicoThe current revenue of the 26 states and the Federal District reached R$ 1,15 trillion in 2022, a real increase of 2,3% compared to the previous year. On the other hand, state current expenses grew by 2,2% in real terms. State tax revenue closed 2022 at R$ 680,2 billion, a real decrease of 4,7% compared to 2021.
"The positive variation was made possible by current transfers, which increased by 13,8% and represented a quarter of current revenue. However, own-source revenue, given by revenue from taxes, fees and betterment contributions, responsible for 59,1% of current revenue, fell by 4,7% in real terms. The performance was mainly affected by the ICMS (Value-Added Tax), which accounts for 76,4% of the own-source tax revenue of all states, whose collection decreased by 7,9%," the report highlights.
In contrast to the drop in ICMS (Value-Added Tax on Goods and Services), state current expenses grew by 2,2% in real terms. This increase was driven by a 5,8% rise in personnel and social security expenses. This item accounts for 55,6% of current expenses. Last year, the decline was more pronounced during the second half of the year.
During this period, the variation in current revenue registered a decrease of 2,1%. Revenue from ICMS (Value-Added Tax on Goods and Services) fell by 14,1%, and tax collection fell by 9,3%. The drop in ICMS in the second half of the year was seen in 24 of the 27 federative entities and remained stable in the others. "In 16 states, the drop exceeded 10%," the publication highlights.
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